Virgin America has started implementing Google's cloud-based Gmail system to replace the Microsoft Exchange 2003 collaboration system the airline has used since 2005.

Ravi Simhambhatla, CIO of Virgin America One airline is flying into the cloud to use its new e-mail system.

Virgin America, a low-cost airline with about 1,700 employees, is in the process of switching from the popular Microsoft Exchange messaging system to Google's cloud-based Gmail service. Airline officials say the migration project, which was started this week and should be completed in about two weeks, is expected save Virgin America hundreds of thousands of dollars.

In short, Virgin America is looking to Google Apps to save the company money, time and valuable human IT resources.

"Very simply put, we are a low-cost carrier and we need to be very judicious about where we put our hard-earned money," said Ravi Simhambhatla, CIO of Burlingame, Calif.-based Virgin America, "The vast majority of our investment should go back into our product to keep customers loyal and to bring in new guests. Looking at traditional IT, we didn't want to take on things like e-mail."

Simhambhatla noted that the company runs Exchange 2003 and was looking at having to upgrade to Exchange 2007. He said he was dreading the expense and hassle of such an upgrade.

Since Virgin America started running Microsoft Exchange in 2005, the company has had two system administrators spending 60% to 65% of their time "managing and massaging" the e-mail system. On top of that, the company's e-mail takes up 9.8 terabytes of its storage capacity plus another 9.8 terabytes to safely mirror that data.

The cost of running Exchange, including licensing and storage, cost Virgin America about $160,000 a year before soft costs like the majority of two system administrators' time, the company said. And the upgrade to Exchange 2007 was looking add significantly to the costs.

Simhambhatla noted that upgrading to the new version of exchenge would require adding a dedicated system administrator, along with new servers and storage capacity. The company estimated the bill for the upgrade would be about $660,000.

The high upgrade cost prompted Simhambhatla to begin looking at Google's cloud solution.

According to the CIO, migrating to Google Gmail will cost the company $330,000 or half the cost of upgrading to Exchange 2007. And the annual cost of Gmail is calculated to be about $100,000 to $110,000., up to $60,000 less than Exchange, he added.

"Ours is a very young company and the vast majority of teammates are already intimately familiar with Google's Gmail, so training them is almost a moot point," said Simhambhatla, who did note that the company has scheduled training sessions for Google Calendar and other new hosted apps. Google also has sent some of its employees to various airports and offices to help any Virgin America employees who need it.

Simhambhatla said he has no fears about the stability or security of the clopud-based system.

Virgin America started the core migration this week and after just two days 1,300 of the 1,700-strong work force were switched over. The migration of the remaining employees, who are mostly located in company headquarters and generally have a lot more data to move, is expected to be completed by Nov. 10.

Simhambhatla noted that for now, Virgin America will continue using other Microsoft applications like Excel. Employees can start using other Google Apps whenever they want but at this point there's no mandate to switch. "We want to take it one step at a time," he said.

Ezra Gottheil, an analyst with Technology Business Research, said he thinks the move to the cloud is a smart one for Virgin America.

"I think it makes perfect sense for Virgin," he added. "Google Apps has been making progress for some time. I think Virgin America is not [Google's] biggest account. But it's another win, for sure."

Once the migration is over, the two systems administrators who have been spending most of their time dealing with e-mail will be free to work on bigger projects.

"These people are freed up to do more innovative IT projects," said Simhambhatla. "There are a whole bunch of programs and projects in the pipeline that they couldn't do because they were so dedicated to Exchange. Cost savings was certainly a reason but not my core motivation. Hosting Exchange in-house does not benefit us in any manner. Give it to someone who can run it, run it well and to scale. I can have my very smart and dedicated sys admins focus on bigger and better things in the company."

"Gmail has been out there for some time," he added. "They've been in the proving ground as far as the cloud is concerned. Microsoft is a great company. Don't get me wrong. But they simply are not there with the cloud."